11 June, 2025.
Good morning,
Global sovereign debt is out of control.
The USA, despite some sincere efforts, still has fiscal largesse running amuck. Corruption at record levels in every area of life.
The ‘old salts’ have all agreed, a couple of years back, that equity markets were most likely over-cooked. Yet, still, they rally, and much of this is of course due to our being caught off-guard, rather than out of touch, with how quickly AI and modern communication technologies are transforming the world.
It is also the case that enforced savings and superannuation policies are delivering enormous amounts monthly, at a relative to market level never before seen, and that this money has to be invested somewhere. Even if a manager is cautious, a significant amount of the funds hitting their desk each month are still going to go into stocks.
All the warnings have been there for some time.
An ever narrowing stock rally to the very tip of the spear with just a handful of stocks. The feverishly bullish spin across all the financial media, as the industry is now driven by the advertising revenue of the very same they once had the role to critique, big fund mangers, brokers and banks. Crumbling manufacturing bases across the west. Over-regulation to untold levels. Complexity of taxation systems where the rich no longer pay. A society so stressed in the pre-eminent capital nation, where the average wage is not $65,000 per year, but when the top 10% are taken out of the equation is just $35,000 a year, and the number one cause of death, male and female aged 18-45 years is not cancer or heart disease, but drug overdose. Spanning across every socio-economic strata.
The list goes on, but the starkness, the heaviness of the growing wealth gap where consumer spending is held up solely by the rich spending like it is the 1920s, while the majority are stressed and struggling, could not be more clear. It is in this context that the US stock market stages miraculous recovery, one after the other.
For someone such as myself to suggest the US stock market is in a see-through naked bubble phase, is not unreasonable at all.
My illumination, shall we say, today, is what if this really is the biggest bubble of all time? If so, just how big might this bubble become, before with fiscal crisis, divided society, and eventual monetary powerlessness, it just simply pops. One day.
From my limited experience of 40 years trading markets from Macquarie Bank Sydney to BNP Paribas London, Paris, and being a participant and speaker on the biggest economic forums and stages in the world, my guesstimate would be that the Dow Jones Index could well reach 52,500. And more.
In March, 2009, just 48 hours after what turned out to be the absolute low of the Global Financial Crisis, I went on national television, the Switzer Show, Bloomberg , CNBC, ABC and others, and very bravely told the world we had just seen that ‘absolute low’ and the market had just begun a 5-15 year “New Grand Bull Market”. In 2020, I set an end of decade target of 30,000 for the Dow Jones.
All remarkably correct. Yet, I continued to receive hate mail and threats all the way through to 2012, would you believe. Such was the then depth of belief of the herd as a whole that we were still in a bear market.
This is a very different situation.
I am not usually comfortable being on the same side as the herd. Something to consider though, is that the herd has never been so large and so filled to the belly with government borrowings from the future and money printing, while trying to file through still narrow gateways, that the process could take longer, last longer, than ever before in history.
Should this outline of a scenario, where indeed there are true new value breakthroughs in terms of communication technology, market penetration and manipulation techniques of consumers, artificial intelligence and robotics, and the influence over the financial media to maintain a powerful bullish spin and psychology in investors minds, along with no end to the pumping by governments of more money into the system, then of course the Dow Jones can hit 50,000+, in a matter of a few years and the NASDAQ and some individual stocks will continue to do what has never been done in history before.
A big sentence I know, but one that matters as does the next.
All, with little to no regard to the dropping away of the many, as the wealth gap becomes a giant canyon. Like a science fiction movie the Wall Street culture will indeed be walled off form the rest. From the have nots. The party in town will continue for as long as it possibly can. The ever longer, the ever bigger, the greater always the eventual calamity.
Should the Dow Jones break free above immediate resistance right now in the 42,950 to 43,025 zone, and hold firm for several days following, this would represent significant encouragement of the scenario suggested here. The biggest madness of crowds greediest bubble in all of human history.
Please note, I will remain watchful for signs of said calamity initialing on a daily basis, even if we are going to Dow 52,500 in the end.
Clifford Bennett